Which of the Following Statements About Inventory Is NOT True

question 5

Multiple Choice

Which of the following statements about inventory is NOT true?

• A) Inventory sitting on the shop floor costs money.
• B) The best criterion for gauging the effectiveness of manufacturing operations is inventory.
• C) A company's worth can be measured by the size of its inventory.
• D) Large inventories hide operations management problems.
• E) None of these.

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Definitions:

Per Capita Income

A measure of the average income earned per person in a specified area over a defined period of time, often used as an indicator of economic health.

WARP

Weak Axiom of Revealed Preference, a theory in economics that assumes if a consumer prefers product A over B when both are available, then they will not choose B when A is available.

Bundle

An assortment of items or services combined and offered for sale as a complete set.

Laspeyres Price Index

A measure of inflation computed by taking the ratio of the total cost of purchasing a specified basket of goods at current prices to the cost of those same goods at base-year prices.